Should the goal of scientific
inquiry be realism or instrumentalism? A
realist (hard core) would say that
any scientific discipline is trying
to get to the true reality of the
universe (an attempt to do this). E.g.
goal of atomic theory is to get at the true description of the atom. Truth in reference to description about the
true construction of the atom;
positivists would say this is a pseudo problem. Positivist will be skeptical about whether
assumptions of a theory will be true. Predictive accuracy is important; e.g. Ptolemy's
astronomic view of a stationary earth - gave 'accurate' predictions of the
motions of the planets. An
instrumentalist may say "it is O.K.
if you talk about epicycles and such, but I do not have to believe that the planet is really doing all of those
things; as long as your theory is a good
prediction about what will happen."
I.e. they have an agnostic
attitude about entities which they
can not observe. This paper will explain
the main flaw with Schwartz' criticisms
of classical economics by projecting what Friedman's response to those
criticisms would be in terms of the instrumentalism in his essay "The
Methodology of Positive Economics".
Then we will take a look at a more provocative example of
instrumentalist ideology in Dostoevsky's "Grand Inquisitor".

Barry thinks economists have
painted a picture of human nature from an economical viewpoint; that rational economic agents (humans) are
always out to maximize their self-interest, and if let alone to exchange in the
free marketplace, they would create a prosperous, efficient society where
everyone gets what he wants (at least most, or more than in any other kind of
society). Three arguments against this viewpoint:

1. The portrait of human nature given by economists is (in important
respects) inaccurate; e.g. people
sometimes display a variety of economic "irrationalities".

2. The portrait of
human nature is incomplete. We need to examine their non economic activities in order to
make sense of their economic ones.

3. It depends on the
kind of culture people inhabit, for how closely they approximate the
economist's portrait of economic
rationality. I.e. cultural
relativity.

Examples of human's economic "irrationalities":

We do not express and maximise preferences.
Fifty dollar example.

Do not always prefer cheap to expensive. Price
as guide. 6 VCRs example.

Preferences not always transitive. A over B over P. Preferences can be transitive whenever there
is only one dimension of comparison among commodities that is relevant. He says this does not work because objects
come as whole objects; and people
cannot decompose t hem into dimensions.

Actions are not based on complete information. Paralysis of analysis. Habit & tradition play
roles.

"Satisficing":
rational economic agents do not do this;
they have unlimited wants.

Real people: (unlike
economic men) cannot express preference among all possible commodities, do not
always prefer cheap to expensive, do not always have transitive preferences, do
not act with complete information, no not act to maximize preference, and do
not have stable preferences. Economics presents a limited picture of the
way people actually are and how they actually operate.(Realism) Barry is misleadingly attributing realism to economists, when, in fact,
they are instrumentalists in their
use of a model for humans.

Friedman explains that the goal of a positive science is the
development of a theory or hypothesis that yields valid and meaningful (not trueistic) prediction about phenomena not yet observed. The
widely held view is wrong: to suppose
hypotheses have assumptions as well
as implications and that conformity of assumptions to reality is
a test of the validity of the hypothesis different
from or in addition to the test
by implications. Truly important and
significant hypotheses will be found to have 'assumptions' that are widely
inaccurate descriptive representations of reality, and, in general, the more
significant the theory, the more unrealistic the assumptions (model) . . .
A hypothesis is important if it 'explains' much by little, that is, if
it abstracts the common and crucial elements from the mass of complex and
detailed circumstances surrounding the phenomena to be explained and permits
valid predictions on the basis of them alone.
To be important, therefore, a
hypothesis must be descriptively false in its assumptions;. . . "

Examples: theory of gravitation is wildly unrealistic.

Galileo -
falling bodies; vacuum; Aristotelians say, "oh, well, you are not describing the real world. . .". They criticized Galileo's unrealistic assumptions.
Therefore, why would you do this? . . .
because this theory can accurately predict falling bodies (so say the instrumentalists). If physicists do this all the time; why
cannot economists do this?

Economists have developed the
highly abstract and descriptively unrealistic models of rational economic
agents and free markets. ... do we ever examine every bag of apples to
maximize our choice? The fact that
these abstract away certain properties of humans, should not bother
us. The model is an abstraction and does
not give an accurate description of people.
If you are an instrumentalist,
this does not bother you, if you can
apply a theory to a model which predicts
well. A realist is bothered by this model.
The relevant question to ask about the assumptions is not whether they are descriptively realistic, for they never are, but whether they are sufficiently good approximations for the
purpose at hand. (Do they get the
job done?) Does the theory yield
sufficiently accurate predictions.

Friedman goes on to challenge the
realists' objectives by questioning
whether a hypothesis can be tested by
the realism of its assumptions.

Law
of falling bodies. application
- behaves as if falling in a
vacuum. To test by assumptions, you must
measure various factors (air pressure, shape of object, etc.) Rather, we say, in a wide range of circumstances the formula works. Is it meaningful
to say it assumes a vacuum? Could there be other assumptions which yield
the same result?

Perception in
peoples' minds that Newton had
discovered the laws of gravitation; i.e. laws built into the universe.
This is a realist attitude,
that, therefore, there must be similar
types of laws of economics that one should be able to discover.

Variables; disturbing
influences: air pressure; shape of
the body; velocity attained; etc. A more
simple theory may be a special case
of a more general theory. But to use the more general theory may entail
more cost in order to derive the
benefit of more accuracy.

Leaves
positioned as if they sought to
maximize the amount of sunlight they received.
Implications are consistent
with experience; is hypothesis invalid because we know leaves cannot
consciously seek? Even though assumptions are false,
it is credible because of conformity of implications with observation.

Billiard players. Businessmen act
as if seeking rationally to maximize returns with full knowledge of all data.

Economists are not providing a portrait of human
nature; rather, they act as if etc. Does an economic
scientist want to do this, i.e. study everything else about a human? NO! his comes in at the prediction level. (Cultural relativity)

Ivan, in the "Grand
Inquisitor" is torn between facts & values in a way logical
positivists says should be kept separate and distinct. He goes on and on to describe ugly facts about the world which he
cannot understand; yet he goes on in
spite of logic. Facts to him
represent how the world really is. Grownups have eaten the apple, but children are innocent, yet tortured. "The world stands on absurdities . . . .
I understand nothing. I don't want to understand anything now. I want to stick to the fact. . . . If I try to understand anything, I shall be false to the fact, and I have determined to stick to the fact." (my Euclidean
understanding). He is afraid that if he
goes beyond facts to somehow understand
he will then have to accept the facts; which he refuses to do. If reality
is such that children must share responsibility for their father's crimes, such truth
is beyond my comprehension (the
fall). "While I am on earth, I
make haste to take my own measures. Truth
(knowledge of good and evil) is not worth the price - if sufferings of children
necessary to pay for it. Ivan asks
Aloysha to play the role of God; would he set things up such that innocent
children would have to suffer?
"What about the one without sin and his blood of forgiveness for
all?" The stage is set for the
Grand Inquisitor, the ultimate instrumentalist, who confronts the
silent one (Christ):

Thou hast no right to add
anything to what Thou hadst said of old.
Do not add to the "facts" of the closed canon. That will certainly confuse people. The Pope
has all the knowledge necessary to control
the people (for their own good). I don't care if you are really Him - that does not matter.
What matters is the (predictive) happiness of the people. How can rebels
be happy? You rejected the only way to make men happy. But, fortunately, you passed on the work to us.

The three questions. Who was
right; Thou or the Devil questioner?
Inquisitor, with the cloak of altruism,
shows his real motive for power. Burden of freedom: they will come to
us and beg us to feed them. Freedom and
bread enough for all are not possible.
Tens of thousands seek the bread of heaven; what about the millions who are too weak to forego earthly bread? We care for the weak too. Three powers to control the conscience of these impotent rebels for
their happiness: miracle,
mystery, and authority. Thou wouldst
not enslave man with a miracle. You wanted faith given freely. Men's nature is such that they cannot reject miracle. You think to highly of man. You give him
too much respect. Man is weaker and baser. You asked
too much of him. The elect are only some thousands. What of all the millions? This is a mystery. We have also the right to teach mystery. It is not
love, or free judgment of their hearts that matters, rather a mystery
which they must follow blindly. We have corrected Thy work.

You rejected that last (third)
gift: the sword of Caesar. You could have
created a universal state; Someone to worship, someone to keep his conscience,
and some means of uniting all in on
unanimous and harmonious ant-heap. Thou
art proud of Thine elect; but Thou
hast only the elect, while we give rest
to all.
Freedom, free thought, and science, will lead them into such
straits, and will bring them face to face with such marvels and insoluble
mysteries. Many will come whining at our
feet and say "You were right; you alone possess His mystery; save us from ourselves!" We will teach them not to be proud; to be as children;
and to think that childlike happiness is the sweetest of all. They will submit to us gladly and cheerfully. Peacefully
they will die, and will find nothing beyond the grave; but we shall keep that secret and for their happiness allure them with the reward of heaven and eternity.

We have seen that to
instrumentalists, predictive accuracy
is what is important, not the reality
of the descriptions of the assumptions
of any hypothesis or theory. The Grand
Inquisitor, using his model of an abstraction of human nature, with its common
and crucial elements of the need for miracles,
mystery and authority, can reach his predicted
results of control of the
millions of the non-elect without
any regard for the truth of the ultimate destiny for those people.